grand rapids real estate trends

When news of Uber’s foray into the complex world of real estate hit the wires this past week, many industry watchers took note. The premises for Haus, the new start-up by the Cofounder of Uber, Garrett Camp is to bring transparency into the bidding process between home buyers, sellers and their agents.

How Haus works:

The online platform will allow buyers, sellers and their agents to see (in real time) when offers and changes to offers are made during the bidding process AND respond accordingly. The platform promises to deliver an experience which creates side by side comparisons so that home owners and potential buyers can make fully informed decisions about the home they are bidding on. At the heart of the issue is the concept of ‘real time’.

Super-heated real estate:

Most of the country is experiencing a super heated real estate market. In West Michigan, it is not uncommon for some homes to receive multiple offers within a 24 hour period. Anxious buyers wring their hands as they are informed that offers will not be presented UNTIL a particular time or that they should consider re-submitting their ‘highest and best’ offer due to multiple offers coming in on the same property. Although the majority of real estate agents are honest, there is no way of actually verifying IF additional offers are being presented and so, home buyers are left wondering just how much more they will have to bid to secure the right to purchase the home of their dreams.

Pride and prejudice:

Another largely unspoken aspect of the process is the fact that purchasing a home is not necessarily based on price. Prejudice and preference can sometimes play critical roles. Many homeowners have their own ideas about whom they would prefer to purchase their homes. This may be based on personal preferences, or their concerns about the welfare of their neighbors. Latent within these normal human emotions and desires lies the potential for discrimination, an issue which is a matter of Federal law when applied to the real estate transaction.

Loving a home can infatuate the mind. It can make a home buyer willing to do just about anything to gain an edge or advantage. One of the more commonly used vehicles is a ‘Dear Homeowner’ letter where the potential buyer details why they love the home and why the home owner should in essence ‘pick me!’ Buyers have been known to research the owners place or worship, likes and dislikes and fashion their offers to tug at the home owners emotions. Sometimes, this has included providing pictures of themselves so the homeowner can see who they are.

When secrecy becomes illegal:

The problem with this is a little thing called the law – which prohibits discrimination when it comes the buying, selling or renting of housing based on some very specific criteria. The Federal Fair Housing Act of 1968 and the Federal Fair Housing Amendments Act of 1988 prohibit discrimination on the basis of: race, color, religion, national origin, age, disability, handicap, sex, gender and often local ordinances (State and community) have additional qualifiers.

So, to some extent the secrecy which has shrouded the real estate process has served as a cloak for some of these illegal behaviors. For the same reason that booking a table reservation by Open Table is a preferred vehicle by many when they consider the convenience and the simplicity of not dealing with host/hostess reservations, the idea of being able to view, counter and negotiate a transaction in an open forum might be appealing to a significant segment of the population.

Will we purchase houses like we book online reservations?

Haus does not claim to be a brokerage, financial adviser or tax expert, but the platform may become a tool which serves to bring the bottom line into a transaction negotiation in a very direct way. That being said, buying a house is not like purchasing a car. And, for a homeowner, the process is not just a financial investment, but also a relational and emotional one. It will be interesting to see how or if this catches on as a preferred method of negotiations during a real estate transaction and more importantly to the bottom line, if this results in higher bids for home owners.

A forecast report by CoreLogic released by the National Association of REALTORS for the Grand Rapids/West Michigan area at the end of August predicted a decline in foreclosure rates in the last half of the year. So far, this prediction has held true. As the charts below indicate, foreclosures have dropped in the Greater Grand Rapids area as a percentage of sales volume and the absolute numbers continue to hold steady with modest declines.

This is a good sign and indicator that the steady rise of home prices will continue as inventory levels remain low. In a related survey, the National Association of REALTORS statistical survey also indicated a drop in the 60 and 90 day delinquency rates. Business Week magazine reported a Bloomberg study in which Michigan is said to be recovering from the recession at the second highest rate in the nation, second only to North Dakota where the boon in economic recovery has been fueled in part by the discovery of oil.

If you are currently considering selling your home and may need to sell your home by Short Sale to avoid Foreclosure proceedings, please contact us for a confidential interview to review the options which may be available for you.

For many of you reading this blog, your first instinct to this bold title might be…Really? C’mon, Lola…are you serious?

Yes, I am. Absolutely. I’m going to share with you 3 Solid Reason for why Selling Your West Michigan in the 4th Quarter of 2011 could be a smart move. You may actually look back and say…Why didn’t I do this earlier.

Now, this post is for those of you who have been considering putting your homes on the market, but have hesitated because there has been so much negative press about the housing market. You may have outgrown your current residence or had a life-change such as a marriage or new baby. Perhaps, you NEED to move because you’ve been transferred or you have lost a job and can no longer afford your current payments. Whatever, the reason…read on.

1. The Real Estate Market in Grand Rapids, MI is steadily improving…

Statistics available from the Grand Rapids Association of REALTORS, the industry trade association that monitors housing sales and prices indicate that over the last year, home sales and prices have stabilized and are now beginning to show modest gains. Area REALTORS are posting increased Sales numbers and it is anticipated that Sales will rise above the levels in 2010, the year in which the Home Buyers’ Tax Credit boosted an artificial increase. What’s noteworthy is that this activity has occurred despite double digit unemployment in Michigan and continued challenges in the financing sector. If you have owned your home for at least 10 years, consider obtaining a Market Analysis of your area to determine your current equity position.

2. Mostly Serious Buyers Remain…

Getting a mortgage to purchase a home today is an event worthy of celebration! Although interest rates have fallen dramatically, guidelines for lending and regulation associated with loans have increased dramatically. This has resulted in much higher qualifying standards for home buyers today. Approved Buyers have been vetted through stringent standards. They are also better educated with access to the Internet and the ability to compare the value of their real estate investments.

Buyers today understand the economics of a Housing Sale; they know that many homes are priced 30% BELOW the market value. Subsequently, many area REALTORS report the rise of multiple offers as competition for homes which are priced to Sell increases.

If you own your home without any obligation/mortgage OR have lived in your home for 10+ years, you may be well positioned to enter the market place right now. As Inventory levels have declined in recent months, the available supply has diminished at just the time when Buyers are focused on getting into their new homes before serious snow begins to fly in West Michigan.

3. Almost 14,000 Homes Sold Just Yesterday!

Yep! You read that right. Even with all the dire statistics, home sales continue to average just over 5 Million per year nationwide. If you average that to a daily rate, that means that on the average, 14,000 homes sold within the past 24 HOURS around the nation. One of those homes could have been yours!

Here in West Michigan, we are selling approximately 1,000 homes per month. That means that EVERY DAY, 30-35 homes are Selling right here in your community. While some of those homes are being bought by investors or are homes Sold due to distress situations such as Foreclosure and Short Sales, many are not. In fact…the majority of homes Sold are not. Over the past year on average approximately 43% of homes Sold each month have been due to a hardship situation. But, that means that 57% of home Sold – the majority – have NOT been distress sales.

If you would like a detailed analysis of the housing market in your West Michigan neighborhood or if you’d simply like to talk about your options, please contact us. 616-791-0511

The real estate community in Grand Rapids, MI released the monthly report tracking real estate activity within the metropolis today. It was a mixed bag. In the good news column, the average home price has continued to rise in small increments. The average price of $117,061 is up 2.8% from June of 2009. Inventory levels have also remained fairly stable in spite of the potential for a significant influx of bank owned homes (sometimes referred to as Shadow Inventory).

In a press release from the Grand Rapids Association of Realtors today, Julie Rietberg, CEO of the Association, commented on the June numbers.

“While home under $100,000 are still a majority of the sales, we are seeing an increase in the percentage of sales in the $250,000 to $500,000 homes.” she said. “Homes in this price range can be considered ‘move-up homes’ for the sellers of the homes that first time buyers purchase. This is a sign that there is strength in the West Michigan market beyond the first time home buyer tax credit. The number of homes sold in all categories above $250k outpaced that of 2009.”

Against this back-drop, the number of distress sales also rose to approximately 50% of sales activity, a trend which has been creeping upwards since the beginning of the year. The impact of this rise can be seen in the decrease in total sales volume year to year. The total sales volume for June of 2008 and 2009 hovered within the range of $132 Million. Today, the number is closer to a little over $98 Million.

For home purchasers, these numbers when combined with historically low interest rates still represent an opportunity to invest in real estate . Home sellers should continue to be proactive in staging their homes to create a memorable experience during showing visits from potential buyers and must also be realistic in appreciating that pricing a home today requires an accurate evaluation of what the market value is within the context of your specific neighborhood.

If the saga in the real estate market was a mystery novel, readers would be glued to the pages! The article below is re-printed with permission from the Grand Rapids Realtor® Report, a monthly publication of the Grand Rapids Association of Realtors®.

Winter has traditionally been a period in which sales declined due to weather, holidays etc. But Grand Rapids experienced an upward trend as prices stabilized and inched upwards and inventory levels declined. This was a welcome development from the steady upwards creeping of distress sales (short sales and foreclosures) that the market witnessed towards the end of 2009. Read more about recent developments from Association leaders for yourself!

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The average single-family home sales prices rose 4.6% to $110,574, over January 2010 ($105,714), the first increase since November 2009. The total number of single-family homes sold in February was 930, up 16.1 percent from last month and up 25.5 percent compared to February 2009 (741). Dollar volume of single family homes sold was up 45.6 percent compared to last month.

The average single-family home sales prices rose4.6% to $110,574, over January 2010 ($105,714), thefirst increase since November 2009. The total numberof single-family homes sold in February was 930, up16.1 percent from last month and up 25.5 percent compared to February 2009 (741). Dollar volume of single family homes sold was up 45.6 percent compared to last month.

The number of total active residential listings rose to 7,935 in January. This coupled with the increase in February sales, lead to a decline in the months-of-inventory level to 8.5 months in February, down from 9.5 months in January 2010.

Julie Rietberg, CEO of the Grand Rapids Association REALTORS, commented on the numbers, “The numbers for February were impressive considering that it is a short month and the weather we had in West Michigan,” said Julie. “The winter months were better than what REALTORS were predicting and they are now looking forward to a strong spring market.”

John Postma, President of the Grand Rapids Association of REALTORS, commented on the market, “We’re continuing to see small improvements in the market,” said John. “The average ‘days on market’ is going down, while the average selling price, median sales price and the percentage of the listing price compared to the sales. In certain segments of the housing market, we’re seeing a shortage of homes.”

To view more homes in Grand Rapids, MI please visit our website: www.auduhomes.com. You can register to have any homes that match criteria which you pre-select delivered to your e-mail as soon as the property is listed online! Say goodbye to waiting for the best deals today!

It is not yet noon this Monday morning (12/14/2009). Yet, I have already had several conversations with clients who are disconcerted. On the one hand, they have heard that the market is improving, but the news about their specific home in their specific Grand Rapids, Michigan neighborhood seems to paint a different picture. This information seems at odds with recent headlines.

They are not alone. Those of us in the Mid-West have been listening to the media reports that the economy has turned the corner and that jobs will come roaring back in the spring of 2010. News that seems to obscure the reality that our unemployment rate in Michigan is still one of the highest in the nation. The recent newspaper headlines about the surge in year to date home sales may inadvertently obscure some very pertinent details. Facts which if they happen to relate to the situation in your particular neighborhood may dramatically alter your perception of the real estate marketplace.

It is said that perception creates reality. But it is the facts which ultimately ground reality. But facts sometimes mask the underlying assumptions which serve as their bedrock foundation.

While it is true that there has been an increase in sales over the past year (sales year to date over 2008 are currently up above 35%), it is ALSO true that these sales have largely comprised of distressed properties and therefore PRICES have been driven down almost 13% since the same period last year. And 2008 is on the record for being a year in which home equity plunged dramatically across the nation.

Going back to the conversations I alluded to earlier…in one case, a home that was sold for $90,000 just a mere 3 years ago has been re-sold and closed in June of this year for $38,000! This is not an isolated situation. I have witnessed many homes within the last year that are now retailing for 60% – 75% of what they would have retailed for 3-5 years ago. That’s quite a loss!

So how does one reconcile these numbers? Are homes selling? Yes! Are there bidding wars on the best deals? Absolutely! We’ve had the experience of being told to ‘take a number’ to await word on a multi bid situation. Most of these homes selling today in bidding wars are retailing so far below normal market values, that buyers are waiting in line to get a good deal.

But even these situations should be approached with caution. Under- market pricing does not guarantee a smooth path to home ownership. Some of these homes have been abandoned and severely neglected or they may have hidden underlying issues. It’s important to do careful and thorough research and to have a complete inspection.

If you’re considering flipping a property for a quick profit, it may be prudent to check with your mortgage company to ensure a comprehensive understanding of potential limitations of your financing vehicle in the new lending environment.

Lastly, make sure you have a realistic appreciation for the current housing values in you area. A below market purchase not only impacts the homes around the neighborhood, but will also impact the re-sale value of the remodeled home you intend to place back on the market to some extent. This factor should also be kept in mind when contemplating an area which has been dramatically impacted by the housing crisis.

We are available to provide comprehensive counsel and statistics on neighborhoods in the Grand Rapids area for home owners, home buyers and investors. Please contact us for a confidential inquiry at: info@auduhomes.com

Good News on the housing front & just in time for the Holidays in Grand Rapids, MI. In a market which has seen the worst of times in recent years, arecent article in the Grand Rapids Press heralding an increase of 35 PERCENT in home sales over 2008 was more than welcome…local professionals are ecstatic!

It’s been great to touch base with so many agents who tell me they are busy again. We sold most of our inventory within the last couple of months and are “re-stocking the shelves.” The ‘HOT PRICE’ range is $100,000 ~ $140,000.

This has helped to increase the average Home Sale Price to $109, 826 which was 3.2 percent higher than the same period in 2008. But…year to date, home prices are still down by 15.1% over 2008, a number which can be attributed to the on-going issues with foreclosures and short sales in the local market.

Other noteworthy improvements in the Grand Rapids, MI market include the decreased number of Short Sales and Foreclosures in September and the possibility of the extension of the Home Buyer tax credit which served to enable over 200,000 new jobs last year according to a quote by Jerry Howard, President of the National Home Builders Association in this article.

Now, all this good news does not necessarily indicate we are totally OK. There are still huge inventory of foreclosed properties which have not yet been placed on the market and joblessness continues to be a scourge on the Michigan economy. As we near the end of the year, what happens in these two areas as well as the credit markets will send strong signals about the on-going journey of recovery.

If You’re a Homeowner…

These past several months have created some glimmers of hope. Inventory levels have declined and housing prices have inched up. More importantly, Sales have increased substantially. One of the critical assessments that homeowners who need to sell a home can make is the OPPORTUNITY COSTS CALCULATION. It’s a fairly simple calculation which aids in determining how long you should hold on to your home, if this is a time to sell your home and what your carrying costs without a Sale actually are.

An Example...Calculating the OPPORTUNITY COST

For example, let’s say your home is valued at $140,000. You’ve been in the home for less than a decade and you currently owe approximately $120,000. The OPPORTUNITY COST is determined by taking approximately 10% of your current expected Sales Price and dividing it by 12. In this case:

140,000 X .10 = 14,000

14,000 / 12 = $1,167 = OPPORTUNITY COST per month

That number $1, 167 is approximately what it will cost you EACH MONTH if home prices DECLINE another 10% over the next 12 months. This year, home prices declined approximately 15% overall from last year, and since 2006, there has been a 30% DECLINE nationwide. So an improvement to a decline of only 10% is not unreasonable. You can manipulate the numbers to see a range of options, but most experts seem to think that we can expect declines within the neighborhood of 6% – 10% in home prices over the next year.

Adding the OPPORTUNITY COST to your current mortgage payment gives you a unique perspective of what it will actually be costing you to OVER-PRICE your house in today’s market. If you’d like a detailed report about housing & pricing in your specific Grand Rapids, MI neighborhood, please give us a call at 616-791-0511 or e-mail us at info@auduhomes.com.